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About the Author
Cliff Holste is Supply Chain Digest's Material Handling Editor. With more than 30 years experience in designing and implementing material handling and order picking systems in distribution, Holste has worked with dozens of large and smaller companies to improve distribution performance.

Logistics News

By Cliff Holste

March 14, 2012

When Considering a DC Automation Project – First Determine Project Goals, Objectives & Scope

Start Your DC Automation Project By First Agreeing On What Needs To Be Accomplished And In What Timeframe

If you are a distributor with limited internal resources, and are seriously thinking about “automating” your order fulfillment operation, getting off to the right start is important. Unless you have some previous experience with the planning and development of complex projects, knowing how to prepare for a project that will have long term implications on the company’s business may not be so obvious.

This is a challenge that many logistics executives and DC managers struggle with. If the first steps you take lead in the wrong direction it could delay or even kill the project. Yet the risk of continuing to procrastinate may have even greater consequences.

Fear is a huge motivator. Knowing that your competitors are enjoying lower per piece handling costs due to the adoption of automated system technologies - has got to be a little unsettling. Especially if they (your competitors) can now provide a broader menu of Value Added Services (VAS) that would seriously constrain your current operation. You know that it’s only a matter of time before you will be forced to provide the same level of services or face losing business.

Holste Says:
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Before committing to a major DC automation upgrade project, make sure that the advisor provides a plan for keeping the DC in operation while the new automation is being phased-in.
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Adopt a Systematic Approach to Moving Forward

No doubt you and your management team are experts in directing and managing the company’s warehousing and distribution business. But, when it comes to adopting and deploying order fulfillment automation technology, you’re going to need some assistance from industry experts. It takes a considerable amount of time to acquire the highly specialized knowledge and experience needed to plan and develop an automation project. Therefore, hiring an independent industry expert or consultant is the most logical approach – that is, if you are ready.

For example: it’s a good idea to bring in a DC automation advisor to help figure out where you need to go relative to operational improvements; but first you need to have a clear understanding and consensus of what your company’s long term goals and objectives are for the business. Will the company be moving to multi-channel marketing? Is eCommerce in the near future? What about growth in sales and products? Is facility expansion a consideration, etc, etc?

There is a plethora of DC automation experts to choose from, but their capabilities, scope of services, and experiences vary widely. They include former warehousing and distribution operations executives, academics, industrial engineers, material handling system engineers, logistics consultants, and system integrators whose operations range from small firms to very large companies with hundreds of employees, and everything in between.


Sole Practitioners and Large Firms Both Have Value

The best type of adviser to use depends on the scope of the particular project. If you’re trying to put in place an integrate network of highly automated DCs, you’re probably better off going with a large logistics consulting firm that has the proven experience, and resources. Many small to medium size system engineering type operations don’t have the resources required to do network analysis, and all the number crunching that goes into simulation modeling.

The same applies if you are consolidating several regional warehousing and distribution operations into one main centralized DC.

On the other hand, if you want somebody to quickly survey your existing DC operation and assist in the planning and developing of an implementable automation solution, the best bet may be an independent sole practitioner or small firm.

When evaluating potential advisers, be very specific about your goals and objectives, then find out what they have done for similar companies, i.e., check references. You may find that the firm (or individual) specializes in a particular vertical or narrow segment of the market. Therefore, given the impact hiring an industry expert advisor can make on your business, you must dig much deeper than reviewing their website to get a true picture of their professional capabilities and core competencies.

It’s crucial to have a clearly defined scope of work for any consulting engagement. Even so, it’s almost guaranteed that the scope of the planning and system development effort will increase, usually do to new issues that are uncovered along the way. In addition, you may want to retain the services of your advisor throughout the design, implementation, and commissioning of the project.

 

Secrets of a Successful Planning Engagement

When working with an independent adviser, review the follow guidelines extracted from Logistics Resources International, Inc.:

 
  • Insist on solid, experienced, and well-qualified consultants.

When hiring a large consulting firm, get a high degree of commitment on the level of consultants to be used on your project. Otherwise a senior partner, with lots of experience can come in to sell the deal, but then you get MBAs fresh out of school (strong on theory, weak on practical experience) who barely know what a forklift is.

 

  • Ability to get along with the internal team.

Once you know who you will be work with - make sure there’s good chemistry between the principal advisor and your team. Look for individuals who fill-in any technology gaps that your team may have.

 

  • Don’t look for a clone of yourself.

Look for advisors that think differently than you do. Try to find someone who will bring up potential solution that you or your team would not normally consider and by doing so contribute to a much stronger result.

 

  • Establish an open atmosphere.

To successfully work with the advisor, establish a strong relationship and promote an open environment and tone where you are free to challenge the advisor and each other. There has to be a real open environment of sharing and feeling that you’re in this together.

 

  • Keep the executive staff informed.

It’s critical that information flow back and forth between the planning team and the executives. This will help to promote ownership and buy-in and greatly reduce the chances of getting off track and consequently presenting a project that they will not support.

Final Thoughts

Before committing to a major DC automation upgrade project, make sure that the advisor provides a plan for keeping the DC in operation while the new automation is being phased-in. This will require system providers to have a detailed step-by-step installation plan – see “Companies Looking to Automate Their DC Operations Are Well Advised To First Do The Homework”.

However, no matter how well you plan, problems invariably arise. Be sure to let your key customers know upfront what you are planning and what the expected benefits are. That way they can plan for potential hiccups and there will be fewer unpleasant surprises.

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